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Imax sells 20 percent stake in China unit for $80M

NEW YORK (AP) -- The theater operator Imax said Tuesday that the Chinese investment fund CMC Capital Partners and Chinese private equity firm FountainVest Partners are buying a 20 percent stake in its operations in China for $80 million.

It says the investments will help strengthen its competitive position in China and expects the deal will eventually lead to an initial public offering of Imax China (Holding) Inc.

Imax said that the investments will help it add more theaters throughout China and strengthen its relationship with China's government and industry.

"At this juncture, it makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China," Imax CEO Richard Gelfond said in a statement.

Imax China will still be a consolidated subsidiary of Imax Corp.

Imax has been expanding its business in China. In December the company announced that it and Chinese partner Wanda Cinema Line Corp. planned to open 80 more of its giant-screen movie theaters in the country. The pair had announced a deal in July 2013 to open 40 theaters together with an option to open 80 more.

Imax has 173 movie screens open in China and plans for another 237 as of the end of 2013.

CMC Capital and FountainVest are making two equal payment installments. The first installment is expected to close Tuesday, while the second is anticipated to close early next year.

A nine-member board will be created for Imax China. The board will include six Imax executives, one representative each from CMC Capital and FountainVest and an independent member to be nominated by the newly created board.

Imax Corp. has headquarters in New York, Toronto and Los Angeles. It had 837 Imax theaters in 57 countries as of the end of 2013.

Its shares finished at $27.67 per share on Monday. They are down more than 6 percent so far this year.